In its letter of 11 June 2010, the European Commission requested that CEIOPS review and expand the high level proposed methodology, taking into account comments received from stakeholders during the consultation on the general criteria.
CEIOPS was asked to publish a fully consulted methodology by mid-November 2010, by which time the Commission will have made its final decision on the third country supervisory regimes that will be included in the first wave of assessments.
In its Call for Advice, the Commission requested that CEIOPS consult a wide range of stakeholders including the European insurance industry, third country supervisory authorities and the insurance industries of third countries.
In the same Call for Advice, the Commission noted that “Although the Commission's proposal for level 2 implementing measures on the general criteria to be used for the assessment are unlikely to be published before the end of 2010, the assessment by CEIOPS should nonetheless be carried out using the draft proposed implementing measures that will have been tabled by the Commission for discussion at the Solvency Expert Group meetings.”
The draft Level 2 measures are not publicly available at this moment. As such, CEIOPS has concentrated on the procedural aspects relevant to equivalence assessments. However, in separate annexes to the main text relating to the individual articles, CEIOPS has used its advice to the Commission on the criteria to be utilised in assessments – and the related indicators - to develop the questionnaires for completion by the third country supervisory authority as part of the assessment process. CEIOPS recognises that these annexes may have to be amended to reflect the Commission’s proposals for the Level 2 measures and the final agreement on these. Nevertheless, CEIOPS believes these annexes are helpful to give stakeholders a full understanding of the approach it is proposed to take.
This methodology has been developed for use in respect of assessments undertaken by CEIOPS, and in the future by EIOPA. CEIOPS notes that the Solvency II Directive also anticipates that in circumstances where the Commission has not taken a decision on the equivalence of a particular third country then under Article 227 the group supervisor shall carry out any verification of the equivalence of the third country regime for the purpose of the group solvency calculation on its own initiative or at the request of the participating undertaking.
Similarly, under Article 260, where there is no Commission decision on equivalence, the verification of whether a particular third country exercises equivalent group supervision to that provided for under Solvency II shall be carried out by the EU supervisory authority which would be the group supervisor if the criteria set out in Article 247(2) were to apply. The verification shall be undertaken at the request of the third country parent undertaking or of any of the insurance and reinsurance undertakings authorised in the Community or on the (EU) group supervisors’ own initiative.
In its advice to the Commission on countries that might be included in the first wave of equivalence assessments CEIOPS suggested that, subject to any relevant transitional measures the Commission might propose, where a third country is of high relevance for a single group, the group supervisor should address these third countries with priority in advance of the implementation of Solvency II.
As different group supervisors may come to different equivalence decisions on the same third country regime in respect of different groups, CEIOPS will ensure, through active co-ordination, that group supervisors follow a consistent approach.
To facilitate this outcome, CEIOPS will adapt this methodology appropriately and issue it as Level 3 guidance to EU group/individual supervisors. This guidance would also cover Article 172, where individual supervisors may need to consider the equivalence of third country supervisory regimes applying to reinsurance activity.
CEIOPS does not anticipate consulting on its Level 3 guidance until the draft Level 2 implementing measures have been published by the Commission.
Once the fully consulted upon Level 3 guidance has been published, group/individual supervisors may consider initiating assessments in advance of the Solvency II implementation deadline.
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